Managing in Dynamic Business Environments

Managing in Dynamic Business Environments

Between Control and Autonomy

Edited by Katarina Kaarbøe, Paul N. Gooderham and Hanne Nørreklit

This timely and innovative book focuses on budgeting control and ongoing Beyond Budgeting trends and its consequences for the organization. Ensuring an optimal balance between individual autonomy and management control is a critical challenge for organizations operating in dynamic business environments. Too much of the former leads to chaos, and too much of the latter guarantees rigidity. This book explores the tensions that arise in seeking the best possible balance between these two dimensions. Resolving these tensions is a critical challenge for achieving competitiveness.

Chapter 1: Control and autonomy – management challenges and tensions

Katarina Kaarbøe, Paul N. Gooderham and Hanne Nørreklit

Subjects: business and management, corporate governance, strategic management

Extract

Let us start with the obvious. Organizations whose competitive advantage lies in attributes such as design, quality of service, customer focus, innovative products or novel solutions are dependent on their employees being willing and able to respond to new challenges and opportunities in fresh and inventive ways. The more turbulent their environments become, the less viable traditional command and control management is and the more critical it becomes that employees are self-regulated. However, what is very much less obvious is how to develop approaches to management control that actually promote and support creative and innovative autonomy rather than undermining it. Management control is often divided into three main forms: hierarchical or regulative control, control based on financial incentives and social control based on peer pressure (Jaffee, 2001; Bemelmans-Videc et al., 2007; Gooderham et al., 2011). Each form of control imposes significant but different constraints on autonomy. “Regulations” are rules that top managers can use to mandate or prevent people in the hierarchy from acting in certain ways. They can be expressed in negative terms, such as demands on what you not are allowed to do. Alternatively, they may also be phrased in affirmative terms and prescribe in a positive way what measures need to be taken.

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